Monday, January 12, 2009

Common Values, Shared Interests: The United States and Its Promise in the Western Hemisphere

Common Values, Shared Interests: The United States and Its Promise in the Western Hemisphere
Mon, 12 Jan 2009 11:30:10 -0600

“Our two continents are becoming more than neighbors united by the accident of geography. We’re becoming a community linked by common values and shared interests in the close bonds of family and friendship. These growing ties have helped advance peace and prosperity on both continents.”– President George W. Bush, March 5, 2007

“The United States has a broad policy in Latin America where we stand for social justice based on economic growth and economic development, where we stand for equality for women and for people of different racial backgrounds.”– Secretary of State Condoleezza Rice, March 13, 2008

It is a great fortune of the United States to share a hemisphere with so many nations that have adopted a common vision for their peoples, a vision which allows citizens the freedom to shape their political destiny and pursue unbounded economic opportunity. The United States shares more than geography and values with these nations; it shares challenges that cross borders and the responsibility to address those challenges with its partners in the hemisphere. The United States has demonstrated its commitment to strengthen the ability of democracies and market economies to deliver what citizens want: economic and social development, reduction of poverty and inequality, and secure homes and communities. In 2008, U.S. official assistance to the region totaled over $1.9 billion. U.S. engagement was built on the four pillars of its Americas policy: promoting prosperity, investing in people, protecting the security of the democratic state, and consolidating democracy. President Bush’s visit to Peru in November – his 13th to the Western Hemisphere – underscored the U.S. promise of sustained, enduring engagement.


Promoting Prosperity

Delivering the benefits of free markets, trade, and economic integration to all citizens is one of the biggest challenges facing democratic governments in the Americas. Access to economic opportunity and the social mobility that it creates is a fundamental component of social justice. The United States helps to create economic opportunity in the Americas through its support for free trade agreements, which the United States now has with countries encompassing two-thirds of the gross domestic product of the hemisphere. Additionally, through foreign assistance programs, particularly the Millennium Challenge Corporation, the United States fights corruption, promotes the rule of law, and creates the kind of democratic and just governance necessary to ensure economic opportunity is not limited to elites, but instead courses through society.

Pathways to Prosperity in the Americas: President Bush and leaders from 11 of the 12 countries with which the United States has signed free trade agreements in the hemisphere launched the Pathways to Prosperity in the Americas initiative in New York in September. “Pathways” is intended to ensure that the benefits of trade are more broadly shared throughout societies. The leaders agreed to work jointly to increase opportunities for citizens, particularly small businesses and farmers, to take advantage of trade; link markets more closely; expand regional cooperation on competitiveness; and enhance cooperation on labor and environmental standards and enforcement. In December, a plan of action to move these objectives forward in practical ways was adopted, and the leaders committed to meeting in 2009 to assess progress on Pathways goals.

Millennium Challenge Corporation: Through the Millennium Challenge Corporation, the United States continued disbursement of nearly $1 billion in support to El Salvador, Honduras, Nicaragua, Paraguay, Guyana, and Peru. These programs support efforts to eliminate corruption, promote transparency, improve healthcare and education, and build roads that connect people and markets.

Biofuels Partnership: The United States and Brazil worked to develop global and regional markets for ethanol and biodiesel in nine countries, with the goal of giving countries in Central America, the Caribbean and Africa a promising new domestic fuel source that will reduce dependence on imported fuels and help governments develop local, sustainable biofuels industries. This followed a memorandum of understanding between the United States and Brazil in 2007 to advance biofuels cooperation.

Chile-California Partnership for the 21st Century: In early 2008, the United States and Chile launched an initiative that builds on natural geographic and climatic symmetries between Chile and the State of California in areas of energy, agriculture, education, innovation and the environment. Chilean President Bachelet met with California Governor Schwarzenegger in June to provide further impetus to the initiative, which pairs prestigious California universities with Chilean counterparts and also promotes business and cultural ties.

U.S.-Brazil Economic Partnership Dialogue: The United States and Brazil held the second and third sessions of the Economic Partnership Dialogue to further strengthen and expand economic cooperation and to address the challenges of globalization. Topics included investment, infrastructure, telecommunications, innovation, agriculture, civil aviation and import safety. Both countries also agreed to continue to promote social inclusion and social justice as key goals of economic development.


Investing in People

All citizens should benefit from the opportunities of democracy. The United States seeks to unlock the vast potential of the Americas by working with its partners to invest in people through improved education and training, health care, access to capital, economic infrastructure, and security for families and their property.

Continuing Promise Deployments to Latin America: Under “Continuing Promise,” two U.S. Navy amphibious ships took health care and other relief services to nine Latin American and Caribbean nations during a humanitarian and civic assistance mission. Medical and engineering crews aboard the USS Boxer worked alongside partner nation officials to provide services in El Salvador, Guatemala and Peru. During its four-month mission, the USS Kearsarge visited Haiti, Nicaragua, Colombia, the Dominican Republic, Trinidad and Tobago, and Guyana, delivering 3.3 million pounds of food, water and other aid to communities that were devastated by a succession of storms (Fay, Gustav, Hanna and Ike).

Hurricane Recovery Assistance: The United States led the donor community’s response to four successive tropical storms that disrupted the lives of 850,000 people in Haiti, providing $31.6 million in food and emergency commodities in addition to logistical coordination and transportation assistance from the U.S. Navy, U.S. Coast Guard, and the Centers for Disease Control. The U.S. Agency for International Development (USAID) proposes to spend $96.5 million in Haiti over the next 3 years on restoring public services, rebuilding infrastructure, and strengthening disaster preparedness and mitigation.

Widespread destruction from Tropical Storm Gustav in Jamaica damaged roads, bridges, houses, livelihoods, agriculture crops and led to loss of livestock across the island. In immediate response, USAID provided $308,000 in emergency relief supplies, and an additional $5 million in U.S. emergency foreign assistance is slated for Jamaica’s agriculture, infrastructure and education sectors.

The United States also made unprecedented offers of hurricane relief assistance to Cuba to help in the recovery from the severe damage caused by these hurricanes. The Cuban government declined more than $5 million in assistance offered on an unconditional basis, but U.S. aid was provided through international organizations. The United States also facilitated humanitarian donations by individuals and NGOs, authorizing $104 million in such assistance in the first two months following the hurricanes.

The U.S. President’s Emergency Plan for AIDS Relief (PEPFAR): From fiscal year 2004-2008, the American people through PEPFAR have provided more than $636 million to Latin America and the Caribbean in support of HIV prevention, treatment and care programs, including more than $169 million in fiscal year 2008. With PEPFAR support, as of September 30, 2008, approximately 20,000 men, women and children are receiving life-saving antiretroviral treatment. In addition, since 2002, the Global Fund to Fight AIDS, Tuberculosis and Malaria committed a maximum of $1 billion for HIV/AIDS programs in Latin America and the Caribbean. The U.S. government is the largest contributor to the Global Fund, having provided approximately 30 percent of all resources to date.

Partnership for Breast Cancer Awareness and Research of the Americas: As announced by First Lady Laura Bush in Panama in November, Panama joined the Partnership for Breast Cancer Awareness, which unites experts from the United States, Brazil, Costa Rica, Mexico and Panama in the fight against breast cancer. The initiative brings together the University of Texas M. D. Anderson Cancer Center, the Susan G. Komen for the Cure, the Institute of International Education, and the strong commitment of the U.S. Government. These partners work to give women the knowledge and confidence to take charge of their own health.

Partnership for Latin American Youth (PLAY): The United States expanded its multi-year education initiative PLAY to provide micro-scholarships to learn English, to participate in high school exchanges in the United States and throughout the region, and to attend community colleges in the United States. PLAY brought together thousands of U.S. and regional youth over the course of the year to learn and share experiences.

Sports Diplomacy Envoys: U.S. public diplomacy and sports envoys shared their time and talents with youth and coaches across the region. The lineup included Baseball Hall of Famers Rod Carew and Cal Ripken, Jr. in Nicaragua; world champion figure skater Michelle Kwan in Argentina; two-time Olympic soccer gold medalist and World Cup champion Cindy Parlow Cone and Women’s National Soccer Team staff coach Jeff Pill in El Salvador; former Major League Baseball player Elias Sosa and the Southern Command allstar baseball team to Panama and Nicaragua; former baseball all-star Barry Larkin to Colombia; Armed Forces baseball players to the Dominican Republic, Panama, and Nicaragua; and collegiate volleyball coaches Erikka Gulbranson and Ashley Dean to Brazil.


Protecting the Democratic State

In recent years, the United States and its regional partners have fundamentally transformed the security agenda for the Americas and forged a consensus on the vital link between security and prosperity. Today’s challenge is to confront both traditional and nontraditional threats, including organized crime, terrorism, gangs, natural disasters and pandemics. Protecting the people of the Americas from these regional threats strengthens democracy, promotes social justice, advances human rights, and creates a secure space for citizens and states to pursue economic prosperity.

The Merida Initiative: In mid-2008, the U.S. Congress appropriated $465 million to support the President’s multi-year security cooperation initiative with Mexico, Central America, the Dominican Republic and Haiti to combat the threats of drug trafficking, transnational crime and terrorism to these countries and the United States. This new strategic partnership has already paid dividends in the form of increased arrests of major traffickers, record seizures of weapons, and reduced flows of drugs, guns and cash across borders.

U.S.-SICA (Central American Integration System) Security Dialogue: The United States hosted the Second U.S.-SICA Dialogue in December. The discussion focused on pressing regional security threats, such as criminal gangs, drug trafficking and illicit trafficking in arms. Both Mexico and Colombia participated in the Dialogue as observers. Other topics addressed included implementation of the Merida Initiative and actions taken by Central American countries to combat security threats in the region.

Continuing Progress in Colombia: With strong bipartisan support since 2000, the United States has helped Colombia turn a corner in bringing security, prosperity, and justice to its citizens. U.S. support to Colombia, both bilaterally and through the Organization of American States’ Mission to Support the Peace Process (OAS/MAPP), is designed to help the country consolidate this success by accelerating economic growth and ensuring that the government provides social services to all its citizens. The Colombian government recognizes the need to expand programs in remote rural areas and to increase the emphasis placed on security, social services, and assistance for especially vulnerable groups, such as the Afro-Colombian population on Colombia’s Pacific coast, indigenous communities and displaced persons. Over the last decade, U.S. support has helped Colombia advance in its protection and promotion of human rights, but much more remains to be done. The United States is committed to supporting and encouraging Colombia in this endeavor.

Security and Prosperity Partnership: The United States updated its bilateral agreements with Canada and Mexico on cross-border emergency management and undertook negotiations to improve North American capacity to recall unsafe food and products. Canada and the United States also signed an agreement to harmonize trusted shipper programs, allowing shippers to comply with a unified set of security requirements. The United States worked closely with businesses in the North American Competitiveness Council to create new initiatives to improve competitiveness in the region. U.S. cooperation with Mexico and Canada now reaches beyond North America; at the New Orleans Summit in April, President Bush and his counterparts from Canada and Mexico agreed to provide funding to the Red Cross to stockpile emergency supplies in Panama to respond to emergencies throughout the region.

North American Aerospace Defense Command (NORAD): In 2008, the United States and Canada celebrated the 50th anniversary of the North American Aerospace Defense Command (NORAD), a joint U.S.-Canada command dedicated to the common defense of North American air space.


Consolidating Democracy

The United States is committed to fostering democratic governance and protecting human rights and fundamental liberties in the Americas. The United States engages bilaterally and multilaterally to help its partners in the Americas strengthen democratic institutions and attack corruption, poverty, inequality, and social exclusion. The United States stands up to tyranny, especially in Cuba, and works to ensure that all the peoples of the Americas have the right and the opportunity to enjoy and express their citizenship in all its dimensions: political, economic and social.

Effective Multilateral Engagement: The United States increased its contribution to the Inter-American Commission on Human Rights (IACHR) to an historic high of $1,360,000 in 2008, with special budgetary support given to the Commission’s rapporteurs on freedom of expression, the rights of women and Afro-descendents, as well as its unit for human rights defenders. In addition to contributing funds allowing for the reconstruction of civil registry information affected by Shining Path activities in Huancavelica, Peru, the United States supported OAS universal birth registration activities in the Caribbean through the Organization of Eastern Caribbean States. The United States also provided critical support for the Third Meeting of the Association of Caribbean Electoral Organizations.

Summit of the Americas: President Bush attended every Summit of the Americas during his administration, starting with the Third Summit in 2001 in Quebec City, the Special Summit in 2004 in Nuevo Leon, and the Fourth Summit in 2005 in Mar del Plata. It is the only forum in which every democratically-elected head of state in the Western Hemisphere meets to find ways to work together on common priorities for the people of the Americas. The Summits led to the signing of the Inter-American Democratic Charter, encompassing hemispheric commitments to improve education, fight HIV/AIDS, combat corruption, provide loans to small and medium-sized businesses, reduce the cost of remittances, and improve the region’s infrastructure and competitiveness. The United States has been an important partner in pursuing these priorities through diplomatic engagement and development programs. The Bureau of Western Hemisphere Affairs is actively engaged in ensuring that the Fifth Summit of the Americas in April of 2009 in Port of Spain will also lead to constructive partnerships that will continue to improve the lives of citizens.

Electoral Observation Missions: In 2008, the United States provided major funding for observation by the Organization of American States (OAS) of electoral processes in Paraguay, the Dominican Republic, Grenada, Honduras, Ecuador and Bolivia. Additionally, to help address democratic institutional weaknesses in Bolivia, the Secretary General of the OAS, with U.S. funding and support, deployed a team of democracy practitioners to assist the country in the areas of legal, judicial, electoral, and citizen participation reform. The United States also supported initial OAS efforts to undertake an audit of the voter registry of Bolivia, in response to an official request by the country’s National Electoral Court.

Commitment to the Cuban people: President Bush joined in the international celebration of Cuba Solidarity Day in May to highlight the aspiration of the Cuban people for freedom and democracy in their country, as well as the need for the Cuban government to unconditionally release political prisoners as a first step in establishing a positive dialogue with its own people. Solidarity Day included public events in Europe and Latin America and commemorations organized by U.S. Embassies throughout the world. The United States also continued the disbursement of $80 million of economic support funds to promote democracy and advance civil society in Cuba and initiated a program for Cuban students to receive Partnership for Latin American Youth scholarships. As part of a broader effort to foster greater openness and communication in Cuba, the United States authorized American citizens to send mobile phones to their relatives in Cuba.

Enhancing Inter-Regional Cooperation: Building upon the success of the 2007 OAS-African Union Democracy Bridge endorsed by the Community of Democracies, the United States supported the joint training of OAS and African Union (AU) technical experts in Mozambique. The OAS, with strong U.S. support, sent a team to observe jointly with the African Union the first elections held in Angola since the end of the country’s 27-year civil war. This marked the first OAS electoral observation deployment outside the Western Hemisphere. Parallel to these initiatives, the United States also supported IACHR efforts to strengthen collaboration with the African human rights system, particularly the African Commission on Human and Peoples’ Rights, in response to mandates of the 2007 OAS General Assembly supporting increased inter-regional cooperation.

Joint Action Plan for Racial Equality: The United States and Brazil signed in March a Joint Action Plan to Eliminate Racial and Ethnic Discrimination and Promote Equality. The plan was officially launched in Brasilia with the first meeting of the Steering Committee, comprised of agencies from both governments, and the announcement of initial activities. These include an International Visitor Program for Brazilian leaders in the public, non-governmental and academic sectors to meet U.S. counterparts and observe U.S. models; student and professor exchanges between Xavier University, an historically Black university in New Orleans, and a counterpart university in Sao Paulo; and a Department of Labor-funded project to eliminate child labor in the state of Bahia. The inaugural Steering Committee meeting also brought in representatives from U.S. and Brazilian non-governmental organizations and academia for thematic discussions whose results were offered to the Steering Committee as guidance for future initiatives.

Kristol in TNYT: BHO's foreign policy will be "Continuity We Can Believe In"

Continuity We Can Believe In, by William Kristol
TNYT, January 12, 2009, page A23

Excerpts:

[...]

And he seems to be going for the no-dramatic-change-in-policy-in-the-White-House alternative as well. Consider Obama’s reaction when George Stephanopoulos played a clip of Dick Cheney counseling Obama not to implement his campaign rhetoric until he’s fully briefed on the details of the Bush administration’s counterterrorism policy.

“I think that was pretty good advice, which is I should know what’s going on before we make judgments and that we shouldn’t be making judgments on the basis of incomplete information or campaign rhetoric. So I’ve got no quibble with that particular quote,” said Obama. Usually, presidents pretend their campaign positions are more than “campaign rhetoric.” Not Obama.

[...]

Obama did note that he differs with Cheney on “some things that we know happened,” including waterboarding. And he did reiterate his pledge to close Guantánamo. But he warned that it was “more difficult than I think a lot of people realize,” explaining that while he was committed to the rule of law, he wasn’t interested “in releasing people who are intent on blowing us up.”

And at one point he returned, unbidden, to the much-maligned vice president, commenting, “I thought that Dick Cheney’s advice was good.”

Perhaps the president-elect was just being polite. Or perhaps he just enjoys torturing (metaphorically!) some of his previously most ardent supporters who want Dick Cheney tried as a war criminal.

In fact, Stephanopoulos asked about that. He pointed to a popular question on Obama’s Web site about whether he’ll appoint a special prosecutor to investigate “the greatest crimes of the Bush administration, including torture and warrantless wiretapping.” Obama stipulated that no one should be above the law. But he praised C.I.A. employees, and said he didn’t want them “looking over their shoulders and lawyering.” He took the general view “that when it comes to national security, what we have to focus on is getting things right in the future, as opposed to looking at what we got wrong in the past.”

With respect to the Middle East, Obama didn’t even say we’d gotten much wrong in the past. Asked by Stephanopoulos whether his policy would build on Bush’s or would be a clean break, Obama answered, “if you look not just at the Bush administration, but also what happened under the Clinton administration, you are seeing the general outlines of an approach.” So: No break.

Meanwhile, the Obama transition team’s chief national security spokeswoman, Brooke Anderson, was denying a press report that Obama’s advisers were urging him to initiate low-level or clandestine contacts with Hamas as a prelude to change in policy. Anderson told The Jerusalem Post that the story wasn’t accurate, and reminded one and all that Obama “has repeatedly stated that he believes that Hamas is a terrorist organization dedicated to Israel’s destruction, and that we should not deal with them until they recognize Israel, renounce violence and abide by past agreements.”

On Iran, Obama did say he’d be taking “a new approach,” that “engagement is the place to start” with “a new emphasis on being willing to talk.” But he also reminded Stephanopoulos that the Iranian regime is exporting terrorism through Hamas and Hezbollah and is “pursuing a nuclear weapon that could potentially trigger a nuclear arms race in the Middle East.” He said his willingness to talk would be combined with “clarity about what our bottom lines are” — one of them presumably being, as he’s said before, no Iranian nuclear weapons. And he demonstrated a sense of urgency — “we anticipate that we’re going to have to move swiftly in that area.”

So: After talks with Iran (if they happen) fail to curb Iran’s nuclear program, but (perhaps) impress other nations with our good faith, we’ll presumably get greater international support for sanctions. That will also (unfortunately) fail to deter Iran. “Engagement is the place to start,” Obama said, but it’s not likely to be the place Obama ends. He’ll end up where Bush is — with the choice of using force or acquiescing to the idea of a nuclear Iran.

[...]

RealClimate: Communicating the Science of Climate Change

Communicating the Science of Climate Change, by Mike Donald
Real Climate, January 12, 2009 @ 9:14 AM


It is perhaps self-evident that those of us here at RealClimate have a keen interest in the topic of science communication. A number of us have written books aimed at communicating the science to the lay public, and have participated in forums devoted to the topic of science communication (see e.g. here, here, and here). We have often written here about the challenges of communicating science to the public in the modern media environment (see e.g. here, here, and here).

It is naturally our pleasure, in this vein, to bring to the attention of our readers a masterful new book on this topic by veteran environmental journalist and journalism educator Bud Ward. The book, entitled Communicating on Climate Change: An Essential Resource for Journalists, Scientists, and Educators, details the lessons learned in a series of Metcalf Institute workshops held over the past few years, funded by the National Science Foundation, and co-organized by Ward and AMS senior science and communications fellow Tony Socci. These workshops have collectively brought together numerous leading members of the environmental journalism and climate science communities in an effort to develop recommendations that might help bridge the cultural divide between these two communities that sometimes impedes accurate and effective science communication.

I had the privilege of participating in a couple of the workshops, including the inaugural workshop in Rhode Island in November 2003. The discussions emerging from these workshops were, at least in part, the inspiration behind "RealClimate". The workshops formed the foundation for this new book, which is an appropriate resource for scientists, journalists, editors, and others interested in science communication and popularization. In addition to instructive chapters such as "Science for Journalism", "Journalism for Scientists" and "What Institutions Can Do", the book is interspersed with a number of insightful essays by leading scientists (e.g. "Mediarology–The Role of Climate Scientists in Debunking Climate Change Myths" by Stephen Schneider) and environmental journalists (e.g. "Hot Words" by Andy Revkin). We hope this book will serve as a standard reference for how to effectively communicate the science of climate change.

"Fiel a los últimos ocho años, Paulson no da explicaciones sobre su estrategia, no responde las preguntas y no lleva siquiera claras las cuentas"

Sent to Gabriel Herrero's blog in the federally owned Spanish radio and TV company, RTVE, as comment to this post:

Respecto a "Fiel a los últimos ocho años, Paulson no da explicaciones sobre su estrategia, no responde las preguntas y no lleva siquiera claras las cuentas", indudablemente siempre se puede hacer mejor. Sin embargo, los comités del Congreso, celosos de sus poderes y preocupados sinceramente por sus deberes con los ciudadanos, pueden ser y son con frequencia un poquito dramáticos con sus explicaciones y sus informes. Vean discursos, minutas de reuniones, informes periódicos o irregulares, etc., enviados por el departamento [de Mr Paulson] al Congreso:

1 Explicaciones de Treasury Dept. en forma de press releases & statements (formato de fecha: mes/día/año):

01/06/2009 Treasury Releases Congressional Report on EESA
01/02/2009 Treasury Releases Guidelines for Targeted Investment Program
01/02/2009 Treasury Releases Emergency Economic Stabilization Report
12/31/2008 Treasury Releases Responses to Congressional Oversight Panel
12/29/2008 Treasury Announces TARP Investment in GMAC
12/23/2008 Treasury Provides TARP Funds to Local Banks
12/19/2008 Secretary Paulson’s Statement on Stabilizing the Auto Industry
12/19/2008 Treasury Term Sheets for Automotive Plan
12/17/2008 Treasury Hires Legal Firm Under the Emergency Economic Stabilization Act
12/10/2008 Interim Asst Sec Kashkari Testimony Before House Financial Services Committee
12/08/2008 Interim Asst Sec Kashkari Update on the TARP Program
12/05/2008 Interim Asst Sec Kashkari Remarks on Financial Markets and TARP Update
12/04/2008 Kashkari Testimony Before Senate Appropriations Financial Services Subcommittee
12/01/2008 Paulson Remarks on the U.S. Economy and Financial System
11/25/2008 Secretary Paulson Remarks on Consumer ABS Lending Facility
11/25/2008 Treasury Provides TARP Funds to Federal Reserve Consumer ABS Lending Facility
11/23/2008 Joint Statement by Treasury, Fed and the FDIC on Citigroup
11/19/2008/ Interim Assistant Secretary Kashkari Remarks on Implementation of the EESA
11/18/2008 Paulson Testimony before the House Committee on Financial Services
11/17/2008 Treasury Releases Capital Purchase Program Term Sheet for Privately Held Financial Institutions
11/14/2008 Interim Asst Sec Kashkari Testimony Before House Committee on Oversight and Govt. Reform
11/12/2008 Paulson Remarks on Financial Rescue Package and Economic Update
11/10/2008 Interim Asst Sec Kashkari Remarks at SIFMA Summit on the TARP 11/10/2008 Treasury to Invest in AIG Restructuring 11/07/2008 Treasury Announces Solicitation for Financial Agents
11/03/2008 Treasury Hires Legal Firms Under the Emergency Economic Stabilization Act 10/28/2008 Acting Under Sec Ryan Remarks at the SIFMA Annual Meeting
10/23/2008 Interim Asst Sec Kashkari Testimony Before Senate Banking Committee
10/22/2008 Treasury Names Interim Chief Investment Officer for TARP 10/21/2008 Treasury Hires Accounting Firms Under the Emergency Economic Stabilization Act
10/20/2008 Paulson Statement on Capital Purchase Program10/20/2008 Treasury Issues Guidance on Capital Purchase Program
10/16/2008 Treasury Hires Legal Adviser Under the Emergency Economic Stabilization Act10/14/2008 U.S. Government Actions to Strengthen Market Stability 10/14/2008 Treasury Announces Executive Compensation Rules Under the EESA
10/14/2008 Treasury Announces TARP Capital Purchase Program Description
10/14/2008 Joint Statement by Treasury, Federal Reserve and FDIC
10/14/2008 Paulson Statement on Actions to Protect the U.S. Economy
10/14/2008 Treasury Hires Custodian Under the Emergency Economic Stabilization Act
10/13/2008 Treasury Hires Investment Adviser Under the Emergency Economic Stabilization Act
10/13/2008 Interim Asst Sec Kashkari Remarks on Implementation of Economic Stabilization Act
10/06/2008 Treasury Announces Solicitations for Financial Agents
10/06/2008 Kashkari Appointed Interim Assistant Secretary for Financial Stability 10/06/2008 Procurement Authorities and Procedures
10/06/2008 Statement by the President’s Working Group on Financial Markets
10/03/2008 Paulson Statement on Bill Passage
09/29/2008 Paulson Statement on Emergency Economic Stabilization Act Vote
09/28/2008 Paulson Statement on Emergency Economic Stabilization Act
09/24/2008 Paulson Testimony before the House
09/23/2008 Paulson Testimony before the Senate
09/22/2008 G7 Statement on Global Financial Market Turmoil
09/19/2008 Statement on Comprehensive Approach to Market Developments


2 Informes enviados al Congreso sobre transacciones del programa conocido como TARP (mes/día/año, PDFs):

01/06/2009
01/05/2009
12/31/2008
12/29/2008
12/23/2008
12/16/2008
12/09/2008
11/26/2008
11/25/2008
11/17/2008
10/29/2008


3 Los llamados tranche reports (mes/día/año, PDFs):
1/8/2009 Tranche Report
12/02/2008 Tranche Report
11/21/2008 Tranche Report
11/03/3008 Tranche Report

4 Explicaciones sobre los programas generados a partir de la legislación EESA (PDFs):

. Capital Purchase Program
. Systemically Significant Failing Institutions Program
. Automotive Industry Financing Program
. Targeted Investment Program

5 Report to Congress Pursuant to Section 102 of the EES Act: Dec 31, 2008, PDF

6 Reports to Congress Pursuant to Section 105 of the EES Act, PDFs:
Jan 06, 2009Dec 05, 2008

7 Interim Assistant Secretary for Financial Stability Neel Kashkari Remarks at Brookings Institution, Jan 08, 2009:http://bipartisanalliance.blogspot.com/2009/01/interim-assistant-secretary-for.html

8 Remarks by Treasury Secretary Henry M. Paulson, Jr. on The Role of the GSEs in Supporting the Housing Recovery before the Economic Club of Washington, Treasury Dept, January 7, 2009:http://bipartisanalliance.blogspot.com/2009/01/sec-paulson-on-role-of-gses-in.html

9 Minutas de reuniones: Financial Stability Oversight Board (mes/día/año):

10/07/2008
10/13/2008
10/22/2008
11/09/2008
12/10/2008

Todos estos documentos se pueden pedir al servicio de prensa de la embajada más cercana. Si quieren nos los pueden pedir a nosotros.

Para estar al tanto de los nuevos documentos que se produzcan, pueden suscribirse a un servicio de envío por e-mail del propio Treasury Dept.: https://service.govdelivery.com/service/subscribe.html?code=USTREAS_145

Atentamente,
Jorge Mata
Bipartisan Alliance

WaPo: House Democrats did not live up to their promises to treat the minority fairly

Irregular Order
House Democrats did not live up to their promises to treat the minority fairly in the 110th Congress. And the 111th?

Washington Post Editorial, Monday, January 12, 2009; page A12

"BILLS SHOULD generally come to the floor under a procedure that allows open, full and fair debate consisting of a full amendment process that grants the minority the right to offer its alternatives, including a substitute." So promised Nancy Pelosi, now House speaker, before her party regained control of Congress two years ago. That fairness, it turned out, was easier to preach than practice.

When they took over in 2007, Democrats set aside their pledge in order to muscle through their agenda during the first 100 hours; their promises continued to prove hollow in the ensuing months. As with the GOP takeover in 1994 and its accompanying pledges of open debate and fair treatment, Democrats' asserted good intentions yielded to the realities of governing in the face of an opposing party more interested in making mischief than law. Democrats brought more measures to the House floor under closed rules -- permitting no amendments -- than any of the six previous Republican-controlled congresses.

As Sarah Binder, Thomas Mann and Molly Reynolds put it in a new report from the Brookings Institution, "Democratic leaders in 2007 quickly concluded that implacable opposition to their agenda by President Bush and the Republican congressional leadership, combined with the 60-vote hurdle in the Senate, made it virtually impossible to return to regular order in committee, on the floor or in conference and still advance their agenda. . . . Their pledge to curb the procedural abuses of the previous Republican majority would for the most part have to be set aside. The choice was not surprising. Still, it had the effect of exacerbating partisan tensions in Congress and further fouling the toxic atmosphere permeating Washington."

A first-day-of-session skirmish over new House rules suggests that the situation in the 111th Congress may not be much better. The dispute involved a particularly arcane aspect of the rules: whether a "motion to recommit," essentially the minority's right to offer an alternative, must include the word "forthwith," in which case the alternative is immediately adopted if approved, or whether it can use the word "promptly," in which case the measure is sent back to committee and effectively killed for the time being. Democrats tightened the rules to end the latter practice, which had become a popular tool in the previous Congress. They argued that Republicans had repeatedly abused these motions, wording them to put vulnerable members in a bind by having to choose between killing a bill or taking a politically unpalatable vote destined to turn up in a 30-second attack ad. What was taken away, House Rules Committee Chairman Louise M. Slaughter (D-N.Y.), told us, was "a gimmick that was used to kill bills. . . . The intent was to bring up guns, abortion, illegals -- whatever they wanted to, even if it had nothing to do with the bill."

Republicans countered that Democrats were unfairly limiting one of their few procedural powers. "A rules package that literally shreds the Obama vision" of bipartisanship, charged California Republican David Dreier, the ranking member of the Rules Committee. His complaints seem hyperbolic. "I'm not that upset about this being a major diminishment of minority rights," Donald Wolfensberger, the former Republican staff director of the rules panel, told us.

But there is a legitimate concern about whether the House can return to a semblance of "regular order": committee hearings and markups rather than measures brought precipitously to the floor with little time for review; reasonable allowance for amendments on the floor rather than closed rules allowing no changes; and conferences to resolve differences between the chambers rather than leadership-dictated products. With a bolstered majority and a new president promoting bipartisanship, House Democrats ought to try loosening the reins -- and Republicans ought to show that they are more interested in writing legislation than playing political gotcha.

Joel I Klein and Al Sharpton: Charter Schools Can Close the Education Gap

Charter Schools Can Close the Education Gap. By Joel I Klein and Al Sharpton
It is not acceptable for minority students to be four grade levels behind.

Dear President-elect Barack Obama,

In the afterglow of your election, Americans today run the risk of forgetting that the nation still faces one last great civil-rights battle: closing the insidious achievement gap between minority and white students. Public education is supposed to be the great equalizer in America. Yet today the average 12th-grade black or Hispanic student has the reading, writing and math skills of an eighth-grade white student.

That appalling four-year gap is even worse in high-poverty high schools, which often are dropout factories. In Detroit, just 34% of black males manage to graduate. In the nation's capital -- home to one of the worst public-school systems in America -- only 9% of ninth-grade students go on to graduate and finish college within five years. Can this really be the shameful civil-rights legacy that we bequeath to poor black and Hispanic children in today's global economy?

This achievement gap cannot be narrowed by a series of half-steps from the usual suspects. As you observed when naming Chicago superintendent Arne Duncan to be the next secretary of education, "We have talked our education problems to death in Washington." Genuine school reform, you stated during the campaign, "will require leaders in Washington who are willing to learn from students and teachers . . . about what actually works."

We, too, believe that true education reform can only be brought about by a bipartisan coalition that challenges the entrenched education establishment. And we second your belief that school reformers must demonstrate an unflagging commitment to "what works" to dramatically boost academic achievement -- rather than clinging to reforms that we "wish would work."

Those beliefs led us to form a nonpartisan coalition last year, the Education Equality Project (EEP), which seeks to greatly narrow, if not eliminate, the achievement gap. Mr. Duncan has signed on to the EEP, as have most of the nation's leading big-city school superintendents, such as Paul Vallas in New Orleans, Michelle Rhee in Washington, D.C., and Colorado's new U.S. senator, former Denver superintendent Michael Bennet. Mayors Richard M. Daley in Chicago, Michael Bloomberg in New York City, Adrian Fenty in Washington, D.C., and Cory Booker in Newark, N.J., are on board, too. Several prominent Republicans, including John McCain and Newt Gingrich, have joined our coalition as well.

EEP seeks to ensure that America's schools provide equal educational opportunity, judged by one measuring stick: Does a policy advance student learning? It's an obvious litmus test. Yet the current K-12 school system is designed to serve the interests of adults, not children.

EEP's mission thus turns out to be unexpectedly radical -- and we have run afoul at times of longtime Democratic allies. While we recognize that the No Child Left Behind law has numerous flaws that need correcting, we staunchly support NCLB's core concept that schools should be held accountable for boosting student performance. Dismissing the potential of schools to substantially boost minority achievement, as is now fashionable in some Democratic circles, is ultimately little more than a recipe for defeatism. Like you, we also support expanding parental choice. High-performing urban charter schools such as the KIPP (Knowledge Is Power Program) schools are showing that minority students can close the achievement gap if given access to high-quality instruction.

Finally, our coalition also promotes the development and placement of effective teachers in underserved schools and supports paying them higher salaries. By contrast, we oppose rigid union-tenure protections, burdensome work rules, and antiquated pay structures that shield a small minority of incompetent teachers from scrutiny yet stop good teachers from earning substantial, performance-based pay raises.

What can you and your administration do to close the achievement gap? Although the funding and oversight of public schools is chiefly a state and local responsibility, you still retain the power of the bully pulpit. Beyond expanding federal support for charter schools, as you have proposed, we would urge you to press forward with two other, far-reaching policy reforms.

First, the federal government, working with the governors, should develop national standards and assessments for student achievement. Our current state-by-state approach has spawned a race to the bottom, with many states dumbing down standards to make it easier for students to pass achievement tests. Even when students manage to graduate from today's inner-city high schools, they all too frequently are still wholly unprepared for college or gainful employment.

Second, the federal government should take most of the more than $30 billion it now spends on K-12 education and reposition the funding to support the recruitment and retention of the best teachers in underserved urban schools. High-poverty urban schools have many teachers who make heroic efforts to educate their students. But there is no reward for excellence in inner-city schools when an outstanding science teacher earns the same salary as a mediocre phys-ed instructor.

Study after study shows that good teachers have, by far, the highest impact on student learning. "The single most important factor in determining [student] achievement is not the color of [a student's] skin or where they come from," you stated on the campaign trail. "It's not who their parents are or how much money they have -- it's who their teacher is." We couldn't agree more. To close the achievement gap, start with a three-word solution: Teachers, teachers, teachers. The fierce urgency of now cannot be allowed to dissipate into the sleepy status quo of tomorrow.

Mr. Klein, chancellor of the New York City Department of Education, and Rev. Sharpton, president of the National Action Network, are co-chairmen of the Education Equality Project.

Sunday, January 11, 2009

Conservative views on Hillary Clinton nomination

Key Questions for Senator Hillary Clinton, Nominee for Secretary of State, by Steven Groves
Heritage, January 12, 2009WebMemo #2201

Excerpts:

On January 20, the incoming Administration will confront a multitude of international issues. The challenges facing the new secretary of state include intractable regional problems such as Iran, Pakistan, and the status of Taiwan; challenges to U.S. sovereignty posed by multilateral treaties and international organizations; and important national security issues such as NATO expansion and missile defense.

In order to determine where the next secretary of state stands on these crucial issues, the following questions should be put to the nominee during her confirmation hearing:

Question #1: American Sovereignty and International Organizations

What is your view regarding the status within the international system of the independent, sovereign state in general, and the importance of preserving and protecting American sovereignty in particular? Do you ascribe to traditional views of national sovereignty or to the theory of "global governance"?

Answer: There are two competing viewpoints regarding national sovereignty: The traditional view is that the sovereign state has been and should remain the basic operating entity within the international system[1] and that while states participate in international coalitions or organizations (such as the United Nations) in pursuit of goals that transcend their borders, those organizations are restricted to serving the goals of states, not governing them.[2] The competing view advocates "global governance," a system in which sovereignty is a passé notion in an increasingly interconnected world and where international organizations have the same, if not greater, authority to determine the policies of sovereign states. In fact, former Deputy Secretary of State Strobe Talbott once predicted that some day "nationhood as we know it will be obsolete; all states will recognize a single global authority."[3]

The United States should continue to act in concert with its allies to pursue ends of an international nature such as multilateral efforts to combat piracy on the high seas, stabilizing Afghanistan with our partners in NATO, maintaining open global markets, and interdicting banned weapons and technology through the Proliferation Security Initiative. The U.S. should not, however, cede to any nation, group of nations, or international organization the authority to bind the U.S. on matters relating to its national interests, including (but not limited to) nuclear arms,[4] humanitarian intervention,[5] "climate change,"[6] interpretation of the U.S. Constitution,[7] or any other matter that would erode American sovereignty.


Question #2: Pending and Proposed Multilateral Treaties

What are your views regarding several controversial multilateral treaties and efforts by the United Nations that, if supported or ratified by the United States, would erode American sovereignty?

Answer: The "international community," usually acting through the U.N. system, often seeks to influence U.S. foreign policy and constrain American power by enmeshing the U.S. in multilateral conventions such as the U.N. Convention on the Law of the Sea and the proposed U.N. Arms Trade Treaty. Similarly, international organizations and U.N. treaty committees often seek to impose upon America their collective views on controversial and personal matters such as the care and education of children, the death penalty, abortion rights, gun control, and any number of issues traditionally left to Congress, the President, and the American people.

Efforts by international organizations to shape U.S. domestic policy should be opposed, including attempts to modify U.S. law regarding the rights of women and children,[8] the criminal justice system,[9] free speech,[10] and other matters traditionally determined by domestic democratic processes. Moreover, the U.S. must reject attempts by the international community that would limit its options to navigate the high seas and explore the deep seabed,[11] as well as its ability to arm resistance movements against tyrannical regimes.


Question #3: Afghanistan and Pakistan

How will you deal with the threat from a resurgent Taliban that is undermining coalition efforts in Afghanistan and destabilizing parts of northwest Pakistan? How will you martial U.S. diplomatic resources and assistance programs to build up Afghan institutions and convince the Pakistani leadership to stiffen its resolve against the Taliban and other violent extremist groups finding refuge within its borders?

Answer:Sending new U.S. troops to Afghanistan is a welcome step that signals continuing U.S. commitment to the region. However, Washington must also convince its NATO allies to pull their weight in overcoming the terrorist challenge in Afghanistan, which threatens all civilized nations.[12]The U.S. also needs to be cautious in attempting to engage with Taliban elements. Political reconciliation is indeed necessary to stabilize Afghanistan and Pakistan's tribal border areas. But Washington must avoid making statements that could embolden the Taliban leadership and dishearten the Afghan population, who do not support Taliban policies but are intimidated by their violent tactics. While the idea of peeling off lower-level Taliban who are not ideologically committed to the cause may be worthwhile, the U.S. should not overestimate the willingness of senior Taliban leaders to break ranks with their al-Qaeda allies.[13]

The U.S. should also better integrate its strategy toward Afghanistan and Pakistan, focusing more attention on regional diplomacy and building bridges between the two nations.[14]It is essential that Pakistan and Afghanistan work together to combat terrorism, which constitutes an existential threat to both their countries. Washington needs to recalibrate its relationship with Pakistan in a way that draws the country back from the brink of political and financial collapse and convinces the military establishment that Pakistan's national security interests are no longer served by supporting extremists, whether they operate in Afghanistan or India.[15] This should be done through both a calibrated carrot-and-stick policy that targets the military's interests and through increased regional diplomacy.

The Obama Administration, however, should avoid falling into the trap of trying to "resolve" Kashmir. Any effort to inject a direct U.S. role in the Indo-Pakistani bilateral peace process risks encouraging both Pakistani adventurism and unrealistic expectations for a settlement in its favor.[16] Moreover, the Indians would be unreceptive to attempts at direct U.S. mediation and would assume that Washington is reverting back to policies that view India only through the South Asia lens, rather than as the emerging global power it has become.


Question #4: A Nuclear Iran

What is your view on how the United States can best take action to halt Iran's nuclear weapons program?

Answer: The U.S. should mobilize an international coalition to significantly boost the diplomatic, economic, domestic political, and potential military costs to Tehran of continuing on its present path toward acquisition of nuclear weapons. This coalition should seek to isolate Iran's radical theocratic regime, weaken it through targeted economic sanctions, explain to the Iranian people why their government's nuclear policies will impose growing economic costs and military risks on them, cooperate to contain and deter Iran's military power, encourage democratic change within Iran, and prepare for the use of military force as a last resort.[17]

Unfortunately, the U.N. Security Council is a diplomatic dead end whose actions will likely continue to be insufficient to stop Iran's drive for nuclear weapons.[18] Past U.S. and European efforts to ratchet up sanctions against Iran in the council have been blocked by Russia and China, which have lucrative trade relationships with, and strategic ties to, Tehran. Britain, Germany, and France have entered a diplomatic dialogue with Tehran to dissuade it from continuing its nuclear program by offering substantial economic and political incentives. But diplomatic carrots alone will not work because for Tehran, attaining a nuclear weapon is the biggest carrot of all.

Therefore, tougher disincentives for Iran's suspected nuclear efforts are needed. When Tehran perceives the costs of a continued nuclear program to be very high, as it did after the overthrow of regimes in Iraq and Afghanistan, it will be more likely to make concessions and freeze its uranium enrichment program. The Obama Administration should press its European allies--particularly Germany, which is Iran's biggest trading partner--to increase economic sanctions outside the U.N. framework.[19] To give diplomacy a chance, the U.S. and its allies must credibly threaten to impose rising costs on Tehran, particularly in ways that endanger the regime's highest priority--its hold on power.


Question #5: The Visa Waiver Program

Please describe your views regarding the Visa Waiver Program's role in America's overall public diplomacy strategy, including ongoing efforts to strengthen the program. What opportunities and challenges do you see to its continuance in the next Administration?

[...]


Question #6: China and Taiwan

While you are secretary of state, will the Administration reaffirm that Taiwan's status remains unsettled and that the U.S. therefore does not accept the sovereign right of any third country to use force of any kind against Taiwan?

Answer: While current U.S. relations with China make it impossible to declare that Taiwan is a state, nothing can justify the assertion that Taiwan is not a state. Under the 1933 Montevideo Convention, Taiwan possesses all the attributes of a state, and under any interpretation the U.S. tacitly accepts that Taiwan functions in the international community as a sovereign state. All treaties in force between the U.S. and Taiwan prior to January 1, 1979, remain in force, and the U.S. continues to conduct defense and security affairs, including arms sales, with Taiwan as an entity wholly autonomous from the People's Republic of China.[30]

The U.S. must reaffirm that Taiwan's future rests on the assent of the Taiwanese people. While current U.S. diplomatic formulas include assertions that the Taiwan issue is a matter for "the Chinese people on both sides of the Taiwan Strait" to resolve, the context of such positions must be clarified. As President Ronald Reagan pledged, the U.S. "will not ... prejudice the free choice of, or put pressure on, the people of Taiwan" about their future. As a reflection of America's democratic values, the U.S. must give preferential weight to the people of Taiwan in determining their own future.[31]


Question #7: Missile Defense

The NATO Alliance recently recognized in its Bucharest communiqué "the substantial contribution to the protection of Allies from long-range ballistic missiles to be provided by the planned deployment of European-based United States missile defence assets." Will you stand with our NATO allies and reaffirm the importance of missile defense?

Answer: At NATO's April 2008 Bucharest Summit, NATO leaders endorsed U.S. plans to install 10 long-range, ground-based missile defense interceptors in Poland and a mid-course radar in the Czech Republic--the "third site."[32] At NATO's December 2008 foreign ministerial summit in Brussels, all 26 members of the alliance re-endorsed the third site deployment. These endorsements represent a major success both for American diplomacy and transatlantic security.[33] If the United States abandons its Central and Eastern European allies as well as its obligations to NATO, it will not only make itself vulnerable to rogue nations and non-state actors seeking ballistic missile capabilities, but it will also reduce America's influence within the transatlantic alliance.

The threat of ballistic missile attack has grown exponentially, with 27 nations now possessing such capabilities, nearly double that of 15 years ago.[34] It is incumbent upon the United States to consider these growing threats seriously by taking steps to protect itself, its forward-deployed troops, and its friends and allies. As a purely defensive capability, U.S. missile defense plans for Europe will also act as a deterrent to bad actors from acquiring ballistic missiles and weapons of mass destruction in the first place.

It is further incumbent upon the United States to stand by its existing commitments to Warsaw and Prague, as well as to the NATO alliance as a whole. Mr. Obama should begin his presidency by reaffirming the Bucharest communiqué, as well as his vow to rebuild a strong NATO.


Question #8: NATO Expansion

Do you support President-elect Barack Obama's statement that "Ukraine and Georgia ... have declared their readiness to advance a NATO Membership Action Plan. ... They should receive our help and encouragement as they continue to develop ties to Atlantic and European institutions"?[35]

[...]


Question #9: Public Diplomacy

How do you intend to improve the effectiveness of the United States's public diplomacy and strategic communication, and would you support the creation of a new government agency to take the lead on these issues?

[...]


Question #10: Durban II and the U.N. Human Rights Council

In its first few months, the Obama Administration will decide whether to change existing U.S. policy to attend the Durban Review Conference (Durban II) and fully participate in the United Nations Human Rights Council by seeking a seat in the upcoming May election. Would you recommend that the President continue current policy or reverse it?

[...]


[References can be seen at the original link]

Steven Groves is Bernard and Barbara Lomas Fellow in the Margaret Thatcher Center for Freedom, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation. The following Heritage Foundation analysts contributed to this report: Daniella Markheim, Lisa Curtis, James Phillips, Jena Baker McNeill, James Dean, John J. Tkacik, Jr., Sally McNamara, Helle C. Dale, Baker Spring, and Brett D. Schaefer.

Lee Myung-bak will not demand a new apology from Tokyo for its 1910-45 invasion and rule of Korea

Japan, S Korea agree to boost economic cooperation
Japan Today, Monday 12th January, 06:31 AM JST

SEOUL — The leaders of South Korea and Japan agreed Sunday they must boost bilateral cooperation to weather the ongoing global financial storm, as the neighbors try to move beyond their bitter shared history.

Prime Minister Taro Aso, who arrived in Seoul early Sunday, is expected to discuss economic cooperation and international efforts to end the North Korean nuclear standoff at a summit with President Lee Myung-bak on Monday.

Since taking office 11 months ago, Lee has been pushing for improved ties with Japan and has held five summits with Japanese leaders. He has also resumed top-level visits, which were suspended in 2005 to protest then-Prime Minister Junichiro Koizumi’s repeated trips to a controversial Tokyo shrine that honors war dead, including convicted war criminals.

Lee has also said he will not demand a new apology from Tokyo for its 1910-45 invasion and rule of the Korean peninsula. Japanese leaders have repeatedly issued apologies about their country’s colonial past, but many South Koreans say the apologies are insincere.

Addressing a meeting of Korean and Japanese business leaders at his presidential mansion Sunday, Lee called for the two countries to increase their “substantial cooperation” to cope with difficulties arising from the international financial meltdown and jointly tackle other global issues.

Aso told the meeting he felt ties between the traditional rivals had “greatly” improved since Lee came to power.

He earlier told a business forum that Japan and South Korea should cooperate to surmount the financial crisis.

South Korea and Japan are key trade partners with two-way trade reaching $82.6 billion in 2007.

The two countries have taken steps toward restarting stalled free trade talks—which ground to a halt in late 2004 over disagreements on how much to lower trade barriers on agricultural goods. The sides held working-level meetings twice last year to prepare for reopening negotiations.

Aso said both Japanese and South Korean governments have been receiving requests from businessmen to reach the deal.

Bilateral trade has favored Japan with South Korea recording a nearly $30 billion trade deficit with Japan in 2007.

Yasuhisa Kawamura, deputy press secretary at Japan’s Ministry of Foreign Affairs, told reporters in Seoul that South Korea’s trade deficit is “definitely one of the issues, challenges” that free trade talks have to address.

Lee’s diplomatic overtures toward Japan took a hit in July when Tokyo announced it would recommend that a government teaching manual include Japan’s claim to uninhabited islets claimed by both countries.

South Korea temporarily recalled its ambassador in Tokyo and heightened security near the islets. Activists staged near-daily protests in front of the Japanese Embassy and many scholars and newspaper editorials demanded Lee toughen policy on Japan.

In 2000 about 150,000 people moved into California - in 2008, 135,000 people got out

California's Gold Rush Has Been Reversed. By Devin Nunes
Entrepreneurs are fleeing heavy taxes in the state.

WSJ, Jan 10, 2009

Excerpts:

Tulare, Calif.

On Jan. 24, 1848, James Wilson Marshall found gold at Sutter's Mill, in Coloma, Calif., sparking a mad rush of some 300,000 people desiring to strike it rich. San Francisco grew from a tiny hamlet to a boomtown in no time, and in 1850 California entered the Union as the 31st state.With this history at their back, state leaders might have understood that people have a propensity to get up and move when a better life is to be had elsewhere. But no. After more than 150 years of being a destination, California is becoming a place entrepreneurs, investment capital and the hardy workers who made it a global leader in agriculture, technological innovation and scientific research are fleeing. This exodus is the marker of something deeper than a national recession. It's a sign that the attempts by state leaders to spend their way back to prosperity are killing California.

While it has the sixth highest tax burden in the nation, according to the nonpartisan Tax Foundation, California is facing a breathtaking $40 billion budget deficit this year. This comes on the heels of a decade-long spending spree. Last year the state budget was $131 billion, up from $56 billion in 1998.

Citizens are burdened by all manner of state regulations. To mention just one example, this year a new law enacted by ballot initiative bans cages chicken farmers use on the grounds that it is inhuman to put birds in cages that prevent them from spreading their wings. [...] that will force us to buy our eggs from other states and, possibly, others nations, such as Mexico.

And just as a fallen tree can divert the flow of water in a creek, bad economic policies divert the flow of investment. Entrepreneurs and investors, seeking the path of least resistance, leave when it becomes easier to make a living in more business-friendly states. In 2000, according to the state's Department of Finance, about 150,000 people moved into California. But in the years that followed the in-migration slowed, and in 2005 it reversed, when a net 52,000 people moved out. In 2008, the outflow topped 135,000 people.

Consequently, Idaho, Utah and Wyoming all have unemployment rates around 5% at a time when California is suffering an unemployment rate of 9%. Californians are moving east and creating jobs in their new home states.

Over the past few years, we've witnessed the state government's response to the capital and entrepreneur flight out of our state: Taxes remain high, and lawmakers employ all the tricks in the book to produce "balanced" budgets from shifting expenses around to borrowing ever larger sums of money.

It's now time to turn to the ballot initiative and enact needed reforms that elected representatives in Sacramento have been unwilling to tackle on their own. We're on a dangerous fiscal course, and the people themselves will have to fundamentally change state government to correct it.

Two broad reforms are needed. The first is that we must create a part-time, nonpartisan citizen legislature -- a model that has proven effective in states like Texas (part-time) and Nebraska (part-time and nonpartisan). Californians need to be able to elect leaders whose primary interest is public service, not furthering political careers.

The second fundamental reform is on taxes and spending. Other states have passed a Taxpayers' Bill of Rights. We need to do the same, so I and others will soon be launching a campaign to enact the following:

- Two-year budgeting. [...]
- End budget stalemates. [...]
- New spending controls. [...]
- Refund budget surpluses. When the state government is flush with funds, taxpayers should get some of their money back. We need a mandate for the state to send tax-rebate checks to all taxpayers when surpluses exceed the rate of inflation. Had this reform been law in 2001, that year's $10 billion budget surplus would have yielded each taxpayer a rebate of about $667.

My family has farmed the San Joaquin Valley for three generations. And my first lesson in capital flows came when I was 14. I had cracked open my piggy bank to buy seven head of young cattle to raise and sell. I had two choices: I could buy feed or I could fix fences in exchange for free grazing. Like water flowing down a furrow, my cattle went to pasture where I could make a higher profit.

These are big reforms, but we need to stop buying feed to eat for today and start mending fences to make the state better off in the long term. California commerce can again be the envy of the world if we fix the problems that created the financial and economic crisis.

The bottom line is that we should let the water of prosperity flow again unobstructed into our state. If it does, investors, businesses and jobs will return to the Golden State.

Mr. Nunes, a Republican, is a congressman from California.

Saturday, January 10, 2009

U.S. Rejected Aid for Israeli Raid on Iranian Nuclear Site

U.S. Rejected Aid for Israeli Raid on Iranian Nuclear Site, by David E Sanger
TNYT, January 11, 2009

WASHINGTON — President Bush deflected a secret request by Israel last year for specialized bunker-busting bombs it wanted for an attack on Iran’s main nuclear complex and told the Israelis that he had authorized new covert action intended to sabotage Iran’s suspected effort to develop nuclear weapons, according to senior American and foreign officials.

White House officials never conclusively determined whether Israel had decided to go ahead with the strike before the United States protested, or whether Prime Minister Ehud Olmert of Israel was trying to goad the White House into more decisive action before Mr. Bush left office. But the Bush administration was particularly alarmed by an Israeli request to fly over Iraq to reach Iran’s major nuclear complex at Natanz, where the country’s only known uranium enrichment plant is located.

The White House denied that request outright, American officials said, and the Israelis backed off their plans, at least temporarily. But the tense exchanges also prompted the White House to step up intelligence-sharing with Israel and brief Israeli officials on new American efforts to subtly sabotage Iran’s nuclear infrastructure, a major covert program that Mr. Bush is about to hand off to President-elect Barack Obama.

This account of the expanded American covert program and the Bush administration’s efforts to dissuade Israel from an aerial attack on Iran emerged in interviews over the past 15 months with current and former American officials, outside experts, international nuclear inspectors and European and Israeli officials. None would speak on the record because of the great secrecy surrounding the intelligence developed on Iran.

Several details of the covert effort have been omitted from this account, at the request of senior United States intelligence and administration officials, to avoid harming continuing operations.
The interviews also suggest that while Mr. Bush was extensively briefed on options for an overt American attack on Iran’s facilities, he never instructed the Pentagon to move beyond contingency planning, even during the final year of his presidency, contrary to what some critics have suggested.

The interviews also indicate that Mr. Bush was convinced by top administration officials, led by Defense Secretary Robert M. Gates, that any overt attack on Iran would probably prove ineffective, lead to the expulsion of international inspectors and drive Iran’s nuclear effort further out of view. Mr. Bush and his aides also discussed the possibility that an airstrike could ignite a broad Middle East war in which America’s 140,000 troops in Iraq would inevitably become involved.

Instead, Mr. Bush embraced more intensive covert operations actions aimed at Iran, the interviews show, having concluded that the sanctions imposed by the United States and its allies were failing to slow the uranium enrichment efforts. Those covert operations, and the question of whether Israel will settle for something less than a conventional attack on Iran, pose immediate and wrenching decisions for Mr. Obama.

The covert American program, started in early 2008, includes renewed American efforts to penetrate Iran’s nuclear supply chain abroad, along with new efforts, some of them experimental, to undermine electrical systems, computer systems and other networks on which Iran relies. It is aimed at delaying the day that Iran can produce the weapons-grade fuel and designs it needs to produce a workable nuclear weapon.

Knowledge of the program has been closely held, yet inside the Bush administration some officials are skeptical about its chances of success, arguing that past efforts to undermine Iran’s nuclear program have been detected by the Iranians and have only delayed, not derailed, their drive to unlock the secrets of uranium enrichment.

Late last year, international inspectors estimated that Iran had 3,800 centrifuges spinning, but American intelligence officials now estimate that the figure is 4,000 to 5,000, enough to produce about one weapon’s worth of uranium every eight months or so.

While declining to be specific, one American official dismissed the latest covert operations against Iran as “science experiments.” One senior intelligence official argued that as Mr. Bush prepared to leave office, the Iranians were already so close to achieving a weapons capacity that they were unlikely to be stopped.

Others disagreed, making the point that the Israelis would not have been dissuaded from conducting an attack if they believed that the American effort was unlikely to prove effective.
Since his election on Nov. 4, Mr. Obama has been extensively briefed on the American actions in Iran, though his transition aides have refused to comment on the issue.

Early in his presidency, Mr. Obama must decide whether the covert actions begun by Mr. Bush are worth the risks of disrupting what he has pledged will be a more active diplomatic effort to engage with Iran.

Either course could carry risks for Mr. Obama. An inherited intelligence or military mission that went wrong could backfire, as happened to President Kennedy with the Bay of Pigs operation in Cuba. But a decision to pull back on operations aimed at Iran could leave Mr. Obama vulnerable to charges that he is allowing Iran to speed ahead toward a nuclear capacity, one that could change the contours of power in the Middle East.


An Intelligence Conflict

Israel’s effort to obtain the weapons, refueling capacity and permission to fly over Iraq for an attack on Iran grew out of its disbelief and anger at an American intelligence assessment completed in late 2007 that concluded that Iran had effectively suspended its development of nuclear weapons four years earlier.

That conclusion also stunned Mr. Bush’s national security team — and Mr. Bush himself, who was deeply suspicious of the conclusion, according to officials who discussed it with him.
The assessment, a National Intelligence Estimate, was based on a trove of Iranian reports obtained by penetrating Iran’s computer networks.

Those reports indicated that Iranian engineers had been ordered to halt development of a nuclear warhead in 2003, even while they continued to speed ahead in enriching uranium, the most difficult obstacle to building a weapon.

The “key judgments” of the National Intelligence Estimate, which were publicly released, emphasized the suspension of the weapons work.

The public version made only glancing reference to evidence described at great length in the 140-page classified version of the assessment: the suspicion that Iran had 10 or 15 other nuclear-related facilities, never opened to international inspectors, where enrichment activity, weapons work or the manufacturing of centrifuges might be taking place.

The Israelis responded angrily and rebutted the American report, providing American intelligence officials and Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, with evidence that they said indicated that the Iranians were still working on a weapon.

While the Americans were not convinced that the Iranian weapons development was continuing, the Israelis were not the only ones highly critical of the United States report. Secretary Gates, a former director of the Central Intelligence Agency, said the report had presented the evidence poorly, underemphasizing the importance of Iran’s enrichment activity and overemphasizing the suspension of a weapons-design effort that could easily be turned back on.

In an interview, Mr. Gates said that in his whole career he had never seen “an N.I.E. that had such an impact on U.S. diplomacy,” because “people figured, well, the military option is now off the table.”

Prime Minister Olmert came to the same conclusion. He had previously expected, according to several Americans and Israeli officials, that Mr. Bush would deal with Iran’s nuclear program before he left office. “Now,” said one American official who bore the brunt of Israel’s reaction, “they didn’t believe he would.”


Attack Planning

Early in 2008, the Israeli government signaled that it might be preparing to take matters into its own hands. In a series of meetings, Israeli officials asked Washington for a new generation of powerful bunker-busters, far more capable of blowing up a deep underground plant than anything in Israel’s arsenal of conventional weapons. They asked for refueling equipment that would allow their aircraft to reach Iran and return to Israel. And they asked for the right to fly over Iraq.

Mr. Bush deflected the first two requests, pushing the issue off, but “we said ‘hell no’ to the overflights,” one of his top aides said. At the White House and the Pentagon, there was widespread concern that a political uproar in Iraq about the use of its American-controlled airspace could result in the expulsion of American forces from the country.

The Israeli ambassador to the United States, Sallai Meridor, declined several requests over the past four weeks to be interviewed about Israel’s efforts to obtain the weapons from Washington, saying through aides that he was too busy.

Last June, the Israelis conducted an exercise over the Mediterranean Sea that appeared to be a dry run for an attack on the enrichment plant at Natanz. When the exercise was analyzed at the Pentagon, officials concluded that the distances flown almost exactly equaled the distance between Israel and the Iranian nuclear site.

“This really spooked a lot of people,” one White House official said. White House officials discussed the possibility that the Israelis would fly over Iraq without American permission. In that case, would the American military be ordered to shoot them down? If the United States did not interfere to stop an Israeli attack, would the Bush administration be accused of being complicit in it?

Admiral Mullen, traveling to Israel in early July on a previously scheduled trip, questioned Israeli officials about their intentions. His Israeli counterpart, Lt. Gen. Gabi Ashkenazi, argued that an aerial attack could set Iran’s program back by two or three years, according to officials familiar with the exchange. The American estimates at the time were far more conservative.
Yet by the time Admiral Mullen made his visit, Israeli officials appear to have concluded that without American help, they were not yet capable of hitting the site effectively enough to strike a decisive blow against the Iranian program.

The United States did give Israel one item on its shopping list: high-powered radar, called the X-Band, to detect any Iranian missile launchings. It was the only element in the Israeli request that could be used solely for defense, not offense.

Mr. Gates’s spokesman, Geoff Morrell, said last week that Mr. Gates — whom Mr. Obama is retaining as defense secretary — believed that “a potential strike on the Iranian facilities is not something that we or anyone else should be pursuing at this time.”


A New Covert Push

Throughout 2008, the Bush administration insisted that it had a plan to deal with the Iranians: applying overwhelming financial pressure that would persuade Tehran to abandon its nuclear program, as foreign enterprises like the French company Total pulled out of Iranian oil projects, European banks cut financing, and trade credits were squeezed.

But the Iranians were making uranium faster than the sanctions were making progress. As Mr. Bush realized that the sanctions he had pressed for were inadequate and his military options untenable, he turned to the C.I.A. His hope, several people involved in the program said, was to create some leverage against the Iranians, by setting back their nuclear program while sanctions continued and, more recently, oil prices dropped precipitously.

There were two specific objectives: to slow progress at Natanz and other known and suspected nuclear facilities, and keep the pressure on a little-known Iranian professor named Mohsen Fakrizadeh, a scientist described in classified portions of American intelligence reports as deeply involved in an effort to design a nuclear warhead for Iran.

Past American-led efforts aimed at Natanz had yielded little result. Several years ago, foreign intelligence services tinkered with individual power units that Iran bought in Turkey to drive its centrifuges, the floor-to-ceiling silvery tubes that spin at the speed of sound, enriching uranium for use in power stations or, with additional enrichment, nuclear weapons.

A number of centrifuges blew up, prompting public declarations of sabotage by Iranian officials. An engineer in Switzerland, who worked with the Pakistani nuclear black-marketeer Abdul Qadeer Khan, had been “turned” by American intelligence officials and helped them slip faulty technology into parts bought by the Iranians.

What Mr. Bush authorized, and informed a narrow group of Congressional leaders about, was a far broader effort, aimed at the entire industrial infrastructure that supports the Iranian nuclear program. Some of the efforts focused on ways to destabilize the centrifuges. The details are closely held, for obvious reasons, by American officials. One official, however, said, “It was not until the last year that they got really imaginative about what one could do to screw up the system.”

Then, he cautioned, “none of these are game-changers,” meaning that the efforts would not necessarily cripple the Iranian program. Others in the administration strongly disagree.

In the end, success or failure may come down to how much pressure can be brought to bear on Mr. Fakrizadeh, whom the 2007 National Intelligence Estimate identifies, in its classified sections, as the manager of Project 110 and Project 111. According to a presentation by the chief inspector of the International Atomic Energy Agency, those were the names for two Iranian efforts that appeared to be dedicated to designing a warhead and making it work with an Iranian missile. Iranian officials say the projects are a fiction, made up by the United States.

While the international agency readily concedes that the evidence about the two projects remains murky, one of the documents it briefly displayed at a meeting of the agency’s member countries in Vienna last year, from Mr. Fakrizadeh’s projects, showed the chronology of a missile launching, ending with a warhead exploding about 650 yards above ground — approximately the altitude from which the bomb dropped on Hiroshima was detonated.

The exact status of Mr. Fakrizadeh’s projects today is unclear. While the National Intelligence Estimate reported that activity on Projects 110 and 111 had been halted, the fear among intelligence agencies is that if the weapons design projects are turned back on, will they know?

David E. Sanger is the chief Washington correspondent for The New York Times. Reporting for this article was developed in the course of research for “The Inheritance: The World Obama Confronts and the Challenges to American Power,” to be published Tuesday by Harmony Books.

Should Israel seek a diplomatic settlement, or accept Hamas's invitation to a bloodier battle?

Crossroads in Gaza
Should Israel seek a diplomatic settlement, or accept Hamas's invitation to a bloodier battle?
WaPo Editorial, Saturday, January 10, 2009; A12

HAMAS'S QUICK rejection of the U.N. Security Council's call for a cease-fire in Gaza might have surprised some in the West who have followed the mounting civilian casualties and the near-breakdown of access to food, water, and medical services with growing concern. In fact, Hamas revels in the Palestinian suffering its terrorism has triggered. Thousands of its fighters have retreated into Gaza's most densely populated areas, where they continue to fire dozens of rockets a day at Israeli civilians. They want nothing more than to draw Israel into an even bigger and bloodier fight -- during which, Hamas calculates, Israeli forces will suffer heavy casualties, while the even bigger Palestinian losses will reap a propaganda windfall for Hamas across the Middle East and Europe.

Israel's leaders are on the verge of giving Hamas its wish. Its top leaders also rejected the U.N. cease-fire resolution passed Thursday night; now they appear to be debating whether to throw thousands of reserve soldiers into a street-by-street battle. It's not clear what the aim of the new offensive might be. Some Israelis are calling for the overthrow of Hamas's rule in Gaza; others urge a more limited operation to seize a strip of territory along the border with Egypt, which would allow Israel to more directly attack tunnels through which Hamas smuggles weapons.

Either operation would probably do Israel more harm than good -- while raising the already considerable political cost of the war for the United States as well as for Egypt and the Palestinian Authority, Israel's de facto allies against Hamas. Israeli officials have rightly been wary of taking action that would leave their troops bogged down in Gaza -- but several of the options being considered would do just that. For now, there is no responsible Palestinian party to which Israel could hand control of Gaza or even the land near the Egyptian border; the Palestinian Authority, even if willing, remains too weak. Nor is it clear that Israel is capable of stopping either the smuggling or the rocket launches by military means. During the last several years before Israel's withdrawal from Gaza in 2005, it was unable to do so.

Israel's best option remains a deal with Egypt under which action to stop smuggling would be intensified on the Egyptian side of the border. Israel would like international forces to join that effort; Egypt has refused, though it says it would accept more expert help and equipment. If Hamas is to accept a truce, Israel will be expected to open its border crossings with Gaza to normal commerce.

Any diplomatic settlement to the conflict, either between Israel and Egypt or including Hamas, would be unsatisfactory in some ways. Hamas would remain in power and declare itself victorious, and probably any effort to stop new arms smuggling would not be completely effective. Still, given the tremendous human costs of the war -- nearly 800 dead, of whom half may be civilians -- and the escalating political cost to Israel and its allies, a deal would be far better than another military escalation. The Bush administration, which so far has done little more than support Israel's decisions throughout this crisis, should now be pressing it to settle.

Dawn Johnsen and Analysis of Powers of Federal Presidency

Obama Pick to Analyze Broad Powers of President. By Eric Lichtblau
TNYT, Jan 08, 2009, page A22

The legal memorandum, she wrote in a blog entry, was “shockingly flawed,” the constitutional arguments were “bogus,” the broad reading of presidential authority “outlandish,” and the “horrific acts” it encouraged against prisoners were probably illegal.

“Where is the outrage, the public outcry?!” Ms. Johnsen, a constitutional law professor at Indiana University, demanded in the posting.

Now, Ms. Johnsen will have the chance to overturn some of the legal opinions she so harshly condemned. President-elect Barack Obama said this week that he would nominate her to lead the Office of Legal Counsel, the Justice Department office that produced a series of hotly debated legal opinions on presidential power in the war on terror. She led the office on an acting basis during the Clinton administration but, in academia, has become one of the office’s fiercest critics.

Historically, the assistant attorney general for the Office of Legal Counsel, or O.L.C., has operated in obscurity, issuing dry, analytical legal opinions that often never become public.

But it has become a magnet for controversy since the Sept. 11 attacks because of its legal rationales in defense of the president’s wartime authority, and Ms. Johnsen’s nomination has generated unusually intense reactions.

Legal observers on the left have been galvanized by the prospect of a vocal critic of the Bush administration’s terrorism policies reversing eight years of legal policy. Since Ms. Johnsen was selected, some conservatives have criticized her not only for the stridence of her attacks on the Bush administration’s legal policies, but also for her past work as legal director for Naral Pro-Choice America, the abortion rights group.

The Obama transition declined to make Ms. Johnsen available for comment. Nick Shapiro, a spokesman for the transition, issued a statement on Wednesday saying,: “As someone with extensive experience working in the Office of Legal Counsel, Dawn Johnsen has tremendous respect for the traditions of the office and the career professionals who serve there, and if confirmed she will ensure that the law is faithfully interpreted and executed across the federal government.”

Noel J. Francisco, a former lawyer for the counsel’s office in the Bush administration, said the challenge for Ms. Johnsen would be to make the shift from opinionated academic to sober government lawyer.

“The danger that academics risk falling into is approaching things on too theoretical a basis,” he said. “You construct a legal theory that is either overly permissive or overly restrictive and then you apply it to specific circumstances — like a random interrogation tactic. The best heads of O.L.C. start out with a concrete legal question and try to answer that question as narrowly as possible without bringing in these broad-based legal theories.”

Bradford Berenson, who worked as a lawyer in the White House counsel’s office early in the Bush administration, said that under Ms. Johnsen, “the changes may be more marginal than the most rabid partisans might hope for.”

“Whatever her academic views, inevitably when you’re wielding government authority and you’re forced to function in the system, your views get tempered and moderated,” he said.

Mr. Berenson worked with Ms. Johnsen last year in drafting a Senate bill that would require the Justice Department to report to Congress when the counsel’s office issues an opinion finding that the executive branch is not bound by a Congressional statute. The Bush administration threatened to veto the bill, but Mr. Berenson said even if it did not make it into law, Ms. Johnsen would have the chance if confirmed to bring more openness to the office’s legal thinking.

Goodwin Liu, associate dean and law professor at the University of California-Berkeley School of Law, who worked with Ms. Johnsen on the board of the American Constitution Society, said, “She’s a first-rate scholar who will uphold the law, and that will allow her to give the office the independence it needs to restore its credibility.”

Friday, January 9, 2009

Oil Price Volatility and India’s Energy Security: Policies and Options

Oil Price Volatility and India’s Energy Security: Policies and Options. By Zakir Hussain
IDSA, January 09, 2009

The recent downslide in crude oil prices from a peak of US $147 a barrel to below $40 and speculated to fall further to $25 has evidently provided relief to oil importing countries, which have been triply inflicted by huge oil pool deficits, growing food prices and global economic downturn. But based on current oil market fundamentals and past experience, there is no reason not to believe that the current fall in oil prices is likely to be temporary. Sooner or later prices will rise and may even be higher than the recent peak because of two particular reasons. One, the fall in prices has been precipitated by expected cuts in demand as a result of the global economic downturn. In contrast, prices had fallen in the 1980s and 1990s because of an excess of supply over demand. Second, the steep fall in prices is unfavourable to current and planned investment in the oil industry. This would potentially constrict fresh supplies of oil and thus fail to meet the additional demand which is expected to be generated when the world economy in general and emerging economies like India and China in particular revive. The expected timeframe of economic recovery is around 12 to 18 months. These concerns and apprehensions were expressed by the Saudi Oil Minister Ali al-Naimi on December 19, 2008, during an address in London to oil producing and consuming countries. Al-Naimi stated that the steep fall in oil prices is causing havoc with investment plans in oil producing countries and is jeopardizing future oil supplies. He further stated that $75 “is the price that marginal producers need to maintain investments sufficient to provide adequate supplies for future oil consumption needs.”


What is the Fair Price to Boost Oil Production?

It is difficult to decide on an appropriate oil price that could induce or maintain a sustained inflow of investment capital in the oil industry. This is most likely because of the nature of oil, which qualifies as both an economic and strategic commodity, making price analysis truly complex and controversial. Nevertheless, there are two approaches to the ‘great oil price debate’ – structural and cyclical. Structuralists maintain that an abnormal spike in prices is the result of structural changes in the oil industry reflecting the huge investment gap in the past or expected in future, whereas the cyclical group believes in the ‘bubble’ analogy caused by certain mutually reinforcing adverse factors pushing prices upwards. The latter approach believes in physical shortages as a result of geo-politically influenced supply bottlenecks, excess demand and bull-run in the futures market. The current downturn in oil prices reflects the situation portrayed by the ‘bubble’ approach. The global recession has burst the bubble and pushed oil prices to one of the lowest levels. Prices have come down by 74 per cent in the last four months. This has depressed the fundamentals of the oil market and potentially circumvents the inflow of investible funds to the oil industry. This is not a good sign to ensure stable and adequate oil supply in the future. In fact, the global economic downturn is strongly expected to reverse in a couple of years. This scenario predicts possible structural limitations of the oil industry in meeting future demand.

In fact, before the current economic recession set in, some agencies like the International Energy Agency (IEA) had already assessed the future oil demand and estimated the possible volume of investments required, particularly under a business-as-usual scenario, to meet it. In a 2004 report, the IEA estimated that by 2030 the world would be consuming around 121 million barrels per day (mbpd) and, to achieve this, the global oil industry requires an investment of approximately $3 trillion. In a 2006 report, the agency revised the estimated investment volume upwards to $4.3 trillion to produce a little less quantum of oil, 116 mbpd, by 2030. This rise of 43 per cent in investment volume to produce 5 mbpd less oil for the same period has been attributed to the end of ‘cheap oil era’. This in turn is a function of the ageing of existing giant and super giant oil fields as well as the need to drill for oil in new and small sized wells, whose marginal cost would be much higher than that of existing giant and super giant fields.

Thus, under this scenario future oil prices would be in the range of $75 to $90 a barrel. This would perhaps be an appropriate price line to induce a sustained inflow of investment in the oil industry, at least for the foreseeable future. According to Goldman Sachs, 30 ongoing oil projects require $55 a barrel to break even. Due to the current comparatively lower prices, oil companies and those producing oilfield equipment are putting some projects on hold. As a representative of OPEC, Saudi Oil Minister al-Naimi has repeatedly asserted that $75 a barrel was a “fair and reasonable” price for crude oil. During his December 2008 speech in London mentioned earlier, he stated that “when oil is priced lower, such as it is now, there will be less investment and less future supply.” Lufkin Industries, a maker of oil and gas equipment has expressed the same apprehension. According to the median estimates of 33 analysts compiled by Bloomberg, “Oil may rebound next year to average $60 a barrel as the OPEC makes record production cuts to counter the deepest economic slump since World War II.” The IEA has projected that oil prices will rebound to more than $100 a barrel as soon as the world economy recovers, and will exceed $200 by 2030. This view was understandably shared by oil-producing countries, and was articulated by UAE Energy Minister Mohammad al-Hamli, who told reporters that "it is very important to continue investing to maintain and increase capacity in order to be prepared for the next [price] cycle." He characterized the decline as just a "price cycle", having structural implications.


What India Should Do?

India’s case is that of a severely crude oil deficient country. While domestic production has reached a plateau, the fast growing economy is strongly pushing up demand. In the foreseeable future, India’s oil dependence on outside sources would grow to more than 90 per cent of total oil consumption and the bulk of the supplies would be procured from Middle Eastern countries. What is required at this juncture is a plan that can deal with medium term price volatility. First and foremost, India should grab the opportunity created by cheap oil markets. Oil prices are expected to plunge even below the present rate owing to dismal consumption and ballooning stocks around the world. India should ‘lock’ or ‘bind’ supplying countries on medium to long term basis. It should sign long term agreements or bind the supplying countries through ‘contracts’, rather than continue the traditional practice of ‘spot’ market purchases. India should hedge its oil security though oil futures at today’s negotiated rates which have declined to $37.68, the lowest since July 1, 2004, and minimize tomorrow’s price shocks. This is one of three dimensions of ensuring ‘energy security’ at a cheaper rate. This is of utmost importance because oil accounts for approximately more than 42 per cent of India’s total commercial energy mix. At present, India consumes approximately 3.1 million barrels of oil a day and this is expected to grow to a couple of million barrels more, making India the third largest consuming country in Asia and the fourth largest in the world. Expenditure-wise, year-on-year basis, a rise in the price of oil by a single dollar costs the economy approximately Rs.17.7 million. Besides, it would trigger oil-induced cascading effects, including inflation, unemployment, and social unrest. The rise in oil prices witnessed over the last few years has caused havoc to Indian finance. According to the latest data released by the Reserve Bank of India, the current account deficit widened to $12.54 billion during the second quarter of the current financial year, as against $4.29 billion in July-September 2007; net trade deficit has widened to $17.2 billion in the second quarter of fiscal 2008-09 on account of a 45 per cent increase in oil imports partly due to increase in prices. This is an opportune moment for India to initiate and test non-traditional tools to minimize future losses.

It is significant to note that oil exporting countries are also equally anxious to manage the volatility of oil markets and stabilize their oil incomes. Because of ‘Dutch Disease’, their economies have failed to develop other sectors and are more dependent upon the hydrocarbons industry. For them, oil importing countries are very important and they too prefer ‘contracts’ with large oil importers. According to the International Monetary Fund (IMF), calculated in an annualized basis, a decline of $1 in the price of crude would translate into a loss in revenues of $3.5 billion for Saudi Arabia, $300 million for Qatar, $1 billion for the United Arab Emirates (UAE) and $960 million for Kuwait. A cut in demand has drastically reduced prices leading oil refineries to build up huge stocks, both stable and mobile. According to the Wall Street Journal (December 18, 2008) oil supplies are now building at such a rate that over 40 million barrels are being held in idle supertankers around the world. The size of the inventory floating in supertankers is sufficient to meet France’s monthly oil requirements. Thus, it is obvious that the present situation is opportune for both oil producing and consuming countries to enter into ‘contracts’ to hedge their losses from unforeseen shocks and spikes.


Another significant tool that is widely used to ensure uninterrupted oil supply is an integrated energy investment plan. The Government of India should develop a long term integrated energy investment plan with major oil producing countries. Signing of integrated energy agreements would bring a number of benefits: (i) ensure stable and uninterrupted flow of oil during both peace and crises; (ii) oil exporting countries would invest money in India’s refinery sector, thus ploughing money back and generating employment. In fact, this would be just like energy ‘offsets’ coming to India from oil exporting countries; once they set up refineries in India they would develop an economic stake and thus be averse to stopping crude supplies even in a crisis situation. China and Saudi Arabia have signed such integrated energy investment agreements. Saudi Aramco and Chinese Sinopec are in talks to construct a second line facility in Shandong province. The first shipments of Saudi crude arrived at Qingdao in May-June 2008.

As a part of the acquisition plan of oil acreages abroad, India should also invest in the gas sector in these countries. For instance, Gulf countries, except Qatar, have opened up their Gas sector for foreign capital and technology with the objective of feeding gas domestically and exporting oil for revenues in order to finance their economic development. ONGC-Videsh Limited should invest in the gas sector of Gulf countries, which would also enable India to develop the scope for increasing mutual co-operation and reciprocity in diversified fields over the long term.

In a nutshell, the present oil market situation posits both a ‘risk’ as well as an ‘opportunity’ to both oil importing and exporting countries. The fundamentals of the oil market suggests the maximum possibility of rising oil prices in the future, a risk that needs to be warded off by oil exporting countries. The present slump in oil prices offers opportunities to importing countries to hedge against future shocks. This, they can obtain through meticulous use of the commodity market instruments as well as through energy specific policies such as oil futures, forward trading, contracts, integrated agreements, etc. This obviously provides a common basis for interaction between oil exporting and importing countries to strike a balance between their risks and opportunities on mutually agreed terms and conditions. Thus, it is high time India adopts a pro-active hydrocarbons policy and secures its economy against shocks and distress. It is worthwhile to have a few contracts in hand at a few dollar losses today than to be left at the mercy of ruthless oil markets in the future.

Dr. Zakir Hussain is Research Assistant at the Institute for Defence Studies and Analyses, New Delhi.

Tabarrok on President-Elect Barack Obama at GMU

Obama at GMU, by Alex Tabarrok
Marginal Revolution, January 8, 2009 at 01:48 PM

President-Elect Obama just spoke at GMU. I was fortunate to have an invite. He had a number of good lines including as good a one-line explanation and justification for Keynesian economics as you will find:

Only government can break the cycle that is crippling our economy, where a lack of spending leads to lost jobs, which leads to even less spending, where an inability to lend and borrow stops growth and leads to even less credit.

He emphasized that jobs would be created in the private sector and saved in the public sector. Nicely put.

His goal is "not to create a slew of new government programs, but a foundation for long-term economic growth." Very good.

In terms of long-term investment, I was pleased to see him mention the smart grid in particular, an idea I pushed as recently as today.

Overall, my view is that the Obama fiscal stimulus plan is evolving in a sensible direction. As promised, he is a pragmatist who is listening to a wide variety of well-qualified, centrist economists.

A substantial fraction of the fiscal stimulus is tax cuts, a substantial fraction is preventing state and local funding from plummeting, a modest but reasonable fraction is on maintenance and improvements of old infrastructure (projects that are mostly already on the books), and a modest (but increasing over time) fraction is on longer term projects which are likely to pay off in future returns.

At present, I see very little in the way of Keynesian pyramid building. Nor do I see an attempt to grab the revolutionary moment by the horns and push the U.S. in a new direction. Thus, thankfully, No New Deal. There is plenty of uncertainty in the economy but it's not regime uncertainty.

Addendum: Do note that I am evaluating Obama relative to what we can expect given the situation and our current politics and also relative to say the New Deal.

Crime and Economy Don't Tell Whole Story

Crime and Economy Don't Tell Whole Story. By James Q. Wilson
AEI, Thursday, January 8, 2009

Last week, the Los Angeles Police Department reported that in 2008, for the sixth consecutive year, crime fell in the city. At a time when the economy was reeling and unemployment was rising, serious crime dropped about 2.5% over the previous year.

I wish we fully understood why.

During the last two decades, scholars have made great progress in explaining why some individuals are more likely than others to commit crimes, but very little in explaining why the crime rate in a city or nation rises or falls.

Everyone knows that there is more crime in economically depressed inner-city neighborhoods than in affluent suburbs. That fact leads naturally to the assumption that if a community becomes more prosperous, crime rates will go down, and if income levels decline, crime rates go up.

Economists who have checked this view have discovered that it is often true, but not always. They have found, for example, that the burglary rate goes up by 2 percentage points for every 1-percentage-point increase in the unemployment rate. That sounds like a big change until you realize that if the unemployment rate rises from 6% to 8% (which is about what it is in California now), the burglary rate will increase by 4%. Because burglaries aren't measured all that accurately (some are never reported, and police vary in how they report the statistics), it's not certain that we would even notice so small an increase.

A lot of other factors affect the crime rate as well. It often goes up when the population gets younger, and when drug abuse becomes more common. Murder rates are profoundly influenced, at least in big cities, by gang activity. We don't have good ways of understanding why gang activity changes, though we suspect that changes in behavior are influenced by what the police do, whether gang truces have worked and whether gangs are fighting over drug and other illegal transactions.

All these imponderables make it difficult to fully understand why crime rates rise and fall. In the 1960s, the national homicide rate rose by 43%, even though the country was in a period of great prosperity and low unemployment. The homicide rate fell in the 1980s, even as the economy was wobbling, with high interest rates and a steep rise in business bankruptcies. In the 1990s, the murder rate fell by 39% at a time when unemployment also was declining.

So can the economy help explain fluctuations in crime? Sometimes yes, sometimes no. It would be difficult to link rising crime during the prosperous 1960s to economics. On the other hand, a declining economy provides a plausible theory to explain increases in crime during the 1990s. Matters become even more complicated if one goes back to the Depression of the 1930s. We had no FBI data on crime rates at that time, but several studies of individual cities suggest that crime rates fell even though one-quarter of all Americans were unemployed. Why? One reasonable hypothesis is that the Depression pulled families together, and this cohesion inhibited crime.

If you are not yet fully confused by the historical puzzles in the crime-economy link, add this one to your list. It is possible that rising crime rates are a cause rather than an outgrowth of unemployment. Some young men choose to drop out of school or the workforce to sell drugs, rob stores or mug people. They abandon legitimate jobs (and so drive up the unemployment rate) to take on illegal jobs (and so drive up the crime rate).

The role of the police in reducing crime is often overlooked by those preoccupied with the jobs-crime link. The sharp decline in crime in New York--and now in Los Angeles--has a lot to do with how those police departments changed.

Over the last several decades, New York has experienced the country's largest decline in crime since we began keeping records. The reasons are not fully understood but include a 33% increase in the size of the New York Police Department, an excellent computerized system for tracking crime (Compstat), a management style that made precinct commanders fully accountable for managing crime in their districts and an aggressive policy of searching people on the streets for guns.

Chief William J. Bratton has brought some of those tactics to Los Angeles without, alas, a one-third increase in the number of officers. What he has accomplished without a big increase in the size of his force has been remarkable.

To try to sort out the combined and complex relations between crime and the economy, the age of the population, imprisonment, police work, neighborhood culture and gang activity, the National Academy of Sciences Committee on Law and Justice (which I chair) has begun an effort to explain something that no one has yet explained: Why do crime rates change?

If you have any good ideas, let me know.

James Q. Wilson is the chairman of AEI's Council of Academic Advisers.